Natural Gas Dominates U.S. Power Generation: 2 Midstream Stocks to Watch

Electricity demand is likely to remain strong, supported by rapidly expanding data centers and growing air conditioning needs. In the United States, the world’s largest economy, natural gas remains in the spotlight as a key source of power generation.

In this context, let’s take a closer look at two large-cap midstream energy players — Williams WMB and Kinder Morgan, Inc. KMI — to see whether they offer compelling value.

Natural Gas Continues to Lead U.S. Power Generation

Natural gas is a relatively cleaner source of fuel, given its lower emissions of pollutants. Among all the energy sources, natural gas was responsible for 40% of electricity generation in the United States in 2025, per data from the U.S. Energy Information Administration (“EIA”). EIA’s latest short-term energy outlook projects natural gas to account for 40% of U.S. electricity generation in both 2026 and 2027.

By comparison, for this year, the contributions of coal, nuclear and conventional hydropower are likely to be much lower at 16%, 18%, and 6%, respectively, per EIA’s predictions. Thus, for electricity generation, the United States is still largely dependent on natural gas. This makes energy companies involved in natural gas transportation, compression and production worth watching.

2 Pipeline Stocks to Gain: KMI, WMB

Being a leading midstream energy company, Kinder Morgan is well-positioned to benefit from the increasing demand for natural gas both in the United States and worldwide. KMI’s assets comprise the largest transportation network of natural gas in the United States and are responsible for transporting roughly 40% of all the gas produced in the domestic market.

KMI, currently carrying a Zacks Rank #3 (Hold), expects U.S. natural gas demand to grow significantly, supported by rising LNG exports and power demand, including electricity requirements for data centers. Citing Wood Mackenzie, management noted that the demand for natural gas in the United States is likely to surpass 160 billion cubic feet per day (Bcf/D) by 2035, about 46 Bcf/D higher than in 2025. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Williams is a leading midstream energy player and is well-positioned to capitalize on natural gas demand. This is because, with its pipeline network spanning more than 32,000 miles, WMB is responsible for the transportation of significant natural gas volumes produced in the United States. Thus, the company, currently carrying a Zacks Rank of 3, generates stable cash flows for shareholders.

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This article originally published on Zacks Investment Research (zacks.com).

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